Policy credit in disadvantaged regions- recommendations from grassroots level

Preferential capital helped production and business households in disadvantaged areas and commercial traders operating in disadvantaged areas to settle down.

Achievements 

Implementing guidelines and policies of the Party and the State on sustainable poverty alleviation, social security, over the past 13 years Vietnam Bank for Social Policies (VBSP) has been actively implementing the Government preferential credit programs effectively. Specifically, Decision No. 31/2007/QD-TTg dated 05/3/2007 of the Prime Minister on credit for production and business households in disadvantaged areas (Decision 31) and Decision No. 92/2009 / QD-TTg dated 08/7/2009 by the Prime Minister on credit for commercial traders operating in disadvantaged areas (Decision 92) have yielded practical results, gradually alter perception and production behavior from self-sufficient to commercial production, from nomadic ways of living to sedentary farming and settlement, contributing to stabilize local economic and social situation. The policy credit programs in disadvantaged areas have the potential to arouse economic development in the region, create jobs, improve income, thus, considerably improve living conditions for the people right in their hometown.

According to the report, by the end of November 2015, loan turnover under Decision No. 31 reached more than VND 38 trillion, with almost VND 15,400 billion outstanding. Overdue loans accounted for only 0.3% of total loans. The program has lent to over 1.8 million turns of households with nearly 680 thousand active borrowers.

For loan programs under Decision 92, by the end of November 2015, loan turnover was VND 1,000 billion, with over VND 250 billion outstanding. The program has more than 30 thousand borrowers so far, and 8.3 thousand active customers at present.

Recommendations from grassroots level 

In addition to these achievements, the current loan size to production and business households in disadvantaged areas and commercial traders operating in disadvantaged areas is low, only up to VND 30 million which does not meet capital demand of borrowers.

Nguyen Thi Huong in Trai Cai 1 hamlet, Minh Lap commune, Dong Hy district (Thai Nguyen province) said that in 2012, her family borrowed VND 30 million from the credit program for disadvantaged areas of VBSP. Her family invested borrowed money plus her own savings in tea plantations. Currently with 3 acres of tea bringing about 130 kg dried tea per month, minus expenses, the family gets income of VND 5-6 million per month. "Preferential capital has really helped my family with more motivation to take up work efficiently and no longer as poor as we used to be" Huong said. According to Huong, the market requirements for tea products are now clean, delicious, in beautiful form, so investment costs for production therefore increases as well. Besides savings of the family, it is necessary to have loans from the State, but the loan amount currently is too low. Huong expects loan amount increase to roughly VND 150 million.

Mr. Le Dinh Tan - Head of a Savings and credit group in Trai Cai 1, Minh Lap commune, Dong Hy district (Thai Nguyen province)- said: his group has 53 members and VND 930 million outstanding loan. In particular, many households have been borrowing from programs for disadvantaged areas and using loans rather effectively. "Thanks to loans that people here have funding for economic development and many households have overcome poverty sustainably. However, current loan amount of maximum VND 30 million does not yet meet capital needs of production and business households. Raising loan amount is essential to help people to concentrate on production "Mr. Tan recommended.

In accordance to actual needs of the borrowers, VBSP proposes Ministries and the Government to review and adjust loan amount to meet actual needs of the people, which will practically contribute to reducing poverty and ensuring social security.